Trump’s Keystone XL Pipeline Revival: Challenging New Realities in U.S. Oil Politics
Former President Donald Trump is showing renewed interest in the Keystone XL pipeline, but the current circumstances differ greatly from when he first took office. The pipeline’s U.S.-Canadian border crossing permit was initially denied by President Barack Obama in 2015. Trump approved it in 2017, only for President Joe Biden to revoke that permit in January 2021. Following this decision, TC Energy, the pipeline’s developer, announced it would stop pursuing construction.
TC Energy no longer owns the pipeline system that Keystone XL was meant to complement. The sections of pipeline that were installed in Canada and the U.S. have been removed, and any new company interested in building it would need to acquire local permits again.
Oil output in the U.S. has reached all-time highs, weakening the economic argument for transporting Canadian crude to the Gulf Coast. Canada has increased its oil shipments, using a new route to the West Coast instead.
During his latest campaign, Trump criticized Biden for killing the Keystone XL project while supporting the Nord Stream 2 pipeline to Germany. Trump expressed frustration over what he saw as weak leadership.
– What factors contribute to local opposition against the Keystone XL pipeline in Nebraska?
Interview with Dr. Emily Carson, Energy Policy Specialist
NewsDirectory3: Thank you for joining us, Dr. Carson. Given Former President Donald Trump’s renewed interest in the Keystone XL pipeline, can you help contextualize the current landscape compared to 2017 when he first approved it?
Dr. Carson: Thank you for having me. The situation today is quite different from when Trump initially pushed for the Keystone XL pipeline. Back then, the primary arguments were focused on energy independence and job creation. However, since President Biden revoked the permit in 2021, significant changes in both the political and physical context have emerged.
ND3: What are some of these changes?
Dr. Carson: One critical change is the current status of TC Energy, the original developer of the pipeline. They have spun off their oil pipeline business into a new company called South Bow Energy, and they are no longer pursuing Keystone XL. The sections of the pipeline that were installed have been removed, which means that any effort to restart the project would require starting from scratch—including obtaining local permits again, particularly in Nebraska where there is considerable local opposition.
ND3: You mentioned local opposition in Nebraska. Can you elaborate on that?
Dr. Carson: Absolutely. Residents in Nebraska have strong memories of the Keystone XL debates and fear issues related to eminent domain. These fears could pose significant barriers to any new development in that area. Local sentiments against the pipeline project run deep, influenced by environmental concerns and previous attempts to secure land for its construction.
ND3: How has the oil market changed since the initial proposal?
Dr. Carson: U.S. oil output has reached record highs, which diminishes the economic rationale for transporting Canadian crude via Keystone XL. Moreover, Canada has reoriented its oil exports, using routes to the West Coast that bypass the need for this pipeline. This all means that the urgency once felt for Keystone XL has diminished quite significantly.
ND3: In his recent campaign, Trump has criticized President Biden regarding the pipeline. How do you assess that criticism?
Dr. Carson: Trump’s criticisms are indicative of his political strategy, positioning Biden as weak on energy independence while juxtaposing it against support for projects like the Nord Stream 2. However, the reality is more nuanced; the market conditions today do not support Keystone XL’s development in the same way they did in 2017.
ND3: Market expert Andy Lipow noted that existing pipelines sufficiently transport oil. How does this impact the feasibility of Keystone XL?
Dr. Carson: Lipow’s observation is key here. Established infrastructure, such as the Trans Mountain pipeline, already effectively handles the transportation of Canadian crude near the coast. This existing capacity reduces the critical need for Keystone XL, putting additional pressure on any potential new pipeline initiatives.
ND3: What’s your overall assessment of the future of Keystone XL?
Dr. Carson: Given the current conditions—opposition from local residents, changes in ownership, existing infrastructure, and market dynamics—reviving interest in Keystone XL faces substantial hurdles. It will require navigating a complex web of regulatory and public sentiment challenges, and it’s unclear if the political will exists to push through such an initiative once more.
ND3: Thank you, Dr. Carson, for your insights on this evolving issue.
Conversations within Trump’s transition team have touched on how to revive the pipeline project, even though significant hurdles remain. Any new project would involve starting from scratch, including gaining land access, particularly in Nebraska. Residents there still recall the issues from the first attempt, including fears over eminent domain rights.
TC Energy has spun off its oil pipeline business into a new company, South Bow Energy. However, it’s unclear if Trump or his associates have approached this new entity about the Keystone XL project. While South Bow supports efforts to transport Canadian crude, the general market conditions for building a new pipeline are unfavorable.
Market expert Andy Lipow noted that existing pipelines, like the Trans Mountain pipeline, already move large volumes of Canadian crude to the coast for export, reducing the necessity for Keystone XL. Additionally, OPEC has capacity to increase oil production, and global demand is expected to grow slowly. Lipow concluded that the drive for Keystone XL seen in previous years is no longer present.